With the benchmark 30-share Sensex up nearly 26% this year, equities have beaten most other asset classes, including local favorites gold and real estate.

In this column, we look at how five major investments performed in 2012. We ignored the impact of taxes, which are different for various investments, and can significantly alter final returns.

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To be sure, this year’s best investments need not do well next year, so don’t make any bets based on these. Financial advisers recommend dividing your investments among various asset classes, including stock mutual funds, bond mutual funds, and a portion in gold. This way, when one asset class is not doing well, hopefully another one will, thus balancing out your overall portfolio returns.

Stocks and Stock Mutual Funds: Stocks have gained steam in the last few months, as foreign investors piled into them on the expectation that the Indian economy and corporate profits will pick up from next year.

Mutual funds which provide the returns of the benchmark stock indexes have been among the best-performing investments this year.

The Franklin India Index Fund–NSE Nifty, which tracks the return of the National Stock Exchange’s Nifty index, is up 27.7% through Dec. 26, while the HDFC Index Sensex is up 26.5% so far this year, according to data firm Value Research India Pvt.

Meanwhile, the average large-cap mutual fund, which buys stocks of large Indian companies, has risen nearly 24% over the 12 months through Dec. 26, according to Value Research.

Stock pundits believe that stocks could post further gains in 2013, as the economy turns around. Then again, stock investors are often optimistic and we know they often don’t get it right.

Still, if you don’t already have a portion of your overall savings in stocks – as much as half for young people — now is as good a time as any to start building this allocation.

Young professionals, particularly, “should be doing it now,” says Vivek Rege, a financial adviser in Mumbai. He advises investing via Systematic Investment Plans, in which a small portion of the individual’s salary is directly invested in a chosen mutual fund. Be prepared to own your stock funds for 10 years to 20 years, and don’t worry about the wild price swings in the interim.

Gold: Everyone seemed to be a gold bull earlier this year, but the year has ended on a relatively tame note.

The physical gold price in India has risen by around 12.5% this year, with pure gold trading at 30,755 rupees ($559) per 10 grams on Dec. 24, according to the Bombay Bullion Association.

Individuals can also invest in gold via exchange-traded funds, which own gold on behalf of investors and can be traded like a stock. The Goldman Sachs Gold ETF and the Kotak Gold ETF are up nearly 10% so far this year, according to data from Value Research.

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The outlook for gold in 2013 is unclear, as investors wait for a resolution of economic issues in the U.S. and Europe for direction.

In India, gold prices have gained partly because the rupee fell around 4% against the dollar in 2012.

The outlook for gold in 2013 is unclear, as investors wait for a resolution of economic issues in the U.S. and Europe for direction. A decline in “gold prices may be possible,” says Hareesh V., senior analyst at commodity trading-firm Geojit Comtrade Ltd. He expects gold to trade in a range of 28,000 ($509) per 10 grams to 33,000 ($600) per 10 grams, in 2013.

Bank fixed deposit: This is a popular investment for individuals in India. If you had opened a one-year fixed deposit from a bank at the beginning of this year, you would have earned an interest of around 9%.

But banks have already been cutting their deposit rates and may do so again in 2013 if, as expected, the Reserve Bank of India reduces its benchmark interest rates. So, if you plan to put some money in such deposits, hurry.

Bond mutual funds: These funds invest in debt issued by the government or high-quality Indian companies, or both.

These funds are less risky than stock mutual funds, but aren’t as safe as bank fixed deposits. But the extra risk also brings better returns. The average short-term debt fund has gained around 9.7% over the past year, according to Value Research.

Returns can vary from fund to fund. The Templeton India Short-Term Income fund gained 9.9% this year through Dec. 26, while the ICICI Prudential Short-Term fund was up 9.3%, according to Value Research.

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As interest rates are expected to fall in 2013, it may boost demand for homes and, at some point, their prices.

Returns from these funds will also likely come off in 2013, as overall interest rates come down.

On average, residential property prices in seven major Indian cities, including Delhi, Mumbai and Bangalore, gained 1% to 3% in 2012, according to Anuj Puri, India head for real estate consulting firm Jones Lang LaSalle. This data includes both built homes, and those under construction.

Of course, property prices vary from neighborhood to neighborhood, and city to city, so we looked at some sub-sections.

In the National Capital Region, Delhi’s residential property had the lowest gains, thanks to already-high prices. Prices in “South Delhi either remained stagnant or even witnessed marginal decrease,” according to Jones Lang LaSalle.

In Gurgaon, many new apartments under construction were lying unsold in 2012, but areas like Golf Course Extension – where there is plenty of new construction — saw price appreciation of around 15%. In Noida, overall residential real estate prices rose by 20%, while in Faridabad, the average gains were 10%, according to Jones Lang LaSalle.

One of the best bets in the National Capital Region was in homes under construction on Dwarka Expressway, which is near the international airport and a proposed enclave for diplomats. Some projects in this area gained as much as 75% in value, to 7,000 rupees ($127) per square foot, according to Jones Lang LaSalle.

In Mumbai, residential areas that saw the most price appreciation were Parel, Wadala, Dadar (E), Sewri and Chembur – all on the east side of Mumbai from downtown to mid-town. These areas saw price gains of around 9% to 10% year-on-year, according to Jones Lang LaSalle.

The posher neighbourhoods of south Mumbai, such as Colaba, Worli and Prabhadevi saw price increases of 3% to 4% in 2012.

In Bangalore, according to JLL, some of the better-performing destinations in 2012 were in West Bangalore, in areas such as Tumkur Road, Vijayanagar and Magadi Road, where home prices rose by 12% to 15%.

As interest rates are expected to fall in 2013, it may boost demand for homes and, at some point, their prices. But given the high inventory of unsold new homes, that may not happen very soon.

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India Real Time offers analysis and insights into the broad range of developments in business, markets, the economy, politics, culture, sports, and entertainment that take place every single day in the world’s largest democracy. Regular posts from Wall Street Journal and Dow Jones Newswires reporters around the country provide a unique take on the main stories in the news, shed light on what else mattered and why, and give global readers a snapshot of what Indians have been talking about all week. You can contact the editors at indiarealtime(at)wsj(dot)com.